EU, Canada dismiss German minister's threat to block free trade pact

OTTAWA (Reuters) - The European Union and Canada on Friday dismissed threats by a top German politician to block a free trade deal the two sides wrapped up in August after five years of often difficult negotiations.

The deal could increase bilateral trade by a fifth to 26 billion euros ($34 billion) and is widely seen as a template for a larger trade pact between the EU and the United States.

German Economy Minister Sigmar Gabriel said on Thursday that Berlin would reject the deal because it objected to an investor protection provision allowing companies to bring claims against a state if it breached the treaty.

Critics say the investor-state provision would give multinationals too much power and could lead to governments being pressured into ignoring laws on labor, the environment, data protection or food standards.

But European Commission President Jose Manuel Barroso said on Friday EU trade negotiators had acted with the full support of all member states, including Germany.

“Until now all the official communications we have received from Germany were absolutely in favor of this agreement,” he told a news conference in Ottawa to mark the end of the talks.

“I have no doubt this agreement is going to be endorsed by all member states,” he added.

The deal now needs to be vetted by lawyers and translated into the EU’s 24 official languages. Barroso predicted the final pact would be signed next year and become effective in 2016.

Berlin also wants the contentious investor-state provision removed from the deal the EU is negotiating with Washington.

Canadian Prime Minister Stephen Harper said the final version of the deal was based on an agreement in principle the two sides signed last year, which he said had been backed by all EU member states and Canada’s provinces and territories.

“We have an agreement, a good agreement. We have all - and those we represent - committed to it and we will honor those commitments,” he told the news conference.